Get exclusive money‑saving offers and guides

How to manage your money before having kids

Starting a family? Here’s what you need to know to get your finances in order before your life is turned upside-down by kids.

Having children is one of life’s great joys, and watching your kids grow up before your eyes is sure to produce years of cherished memories.

Unfortunately, raising kids isn’t cheap. A 2013 study by AMP and the University of Canberra found that raising two kids in Australia will cost a middle-income family $812,000. This number includes all the expenses incurred from the time the children are born to the day they leave home. That figure rises to $1.09 million for high-income families and drops to $474,000 for families on a lower income.

That’s a lot of money, so it’s important to plan ahead and make sensible spending and investment choices. In particular, the financial decisions you make before having kids can make a huge difference to your bottom line in the future, so let’s look at the top seven tips on how to manage your money before having kids.

Tip 1: Save money

This tip may seem obvious, but saving is something every Australian should do before having kids. Kids cost money to raise and the extra expenses start as soon as you fall pregnant. You’ll need to pay for medical appointments and essential supplies like a stroller and a cot. In addition, your bills will only continue to get bigger as you clothe, feed, educate and (occasionally) spoil your children. And let’s not even start on the cost of childcare, which can be astronomical!

Having money set aside to help meet your increased budget is a sensible decision. The best place to start is to calculate a rough budget and then work out any areas where you can cut back.

Then start putting a little money into a high-interest online savings account whenever you can. Some accounts even pay bonus interest when you deposit more than a specific minimum amount each month, so setting up a regular deposit from your transaction account is an easy way to boost your savings power.

Tip 2: Travel while you still can

It’s a lot easier to take that “once-in-a-lifetime” trip you and your partner have been dreaming of when it’s just the two of you. Dealing with airport check-ins, language barriers and all the other hassles of international travel is a much simpler proposition when you’re in your 20s and don’t have a couple of kids in tow. You’ll get to go where you want to go, do what you want to do and tick all those essential items off your bucket list.

It’s also much cheaper for one or two to travel than a family of four. And by putting all your savings towards expensive round-the-world travel when you’re younger, you can start saving for some slightly more “sensible” and “grown-up” goals as you get into your late 20s and early 30s.

Tip 3: Pay off debt

The interest payments on any outstanding debt can be financially crippling when you’ve got a couple of young kids. While you’re trying to cope with the costs of raising a family and put some money aside for the future, you also have to contend with interest charges on your existing debt eating a hole in your wallet.

That’s why it’s a smart idea to pay everything off before welcoming a child into the world. Whether you’ve got a big credit card debt, a car loan, a personal loan or even a HECS-HELP debt, it’s worth doing everything in your power to pay it off. Look into the debt consolidation methods available and take control of your financial future.

Tip 4: Invest

For many of us, our late teens and much of our 20s is a time to simply spend whatever we earn on holidays, clothes, tech, nights out and whatever else takes our fancy. But if you manage to put some money aside to invest during your younger years, you could give yourself a financial head start on many of your friends. On top of that, any extra income you can rely on when raising a couple of kids could be extremely useful.

There are plenty of places where you can invest your money, including online share trading or in property. Alternatively, if the world of investing seems intimidating and confusing, you could consider one of the new generation of digital financial advisers known as robo advisers.

Trade ASX-listed shares for a flat fee of $9.50, regardless of the trade size. New customers receive free access to Community Insights with SelfWealth Premium for the first 90 days. Follow other investors and benchmark your portfolio performance.

Compare up to 4 providers

One option worth considering is Acorns Australia, which automatically invests your spare change from everyday purchases into a diversified portfolio of exchange-traded funds. It’s an easy way to get started if you have minimal investment knowledge and a minimal amount to invest.

Tip 5: Start a rainy-day fund

Sometimes things go wrong. Cars break down, kids chip their teeth or break bones, roofs leak and pets get sick. Fixing all of these problems could end up costing you a lot of money. Would you be able to cope with an unexpected bill of $500 or potentially much more?

That’s why it’s a great idea to start a rainy-day fund. This is an easily accessible savings account with funds to cover those unexpected emergencies. Knowing the money is there if you need it can provide much-needed peace of mind. The old saying that you can’t predict the future but you can prepare for it definitely applies here.

Tip 6: Don’t forget about your retirement

If you haven’t had kids yet, retirement planning is probably one of the last things on your mind. But it’s never too early to start thinking about how you’ll cope financially when you stop working. In fact, the sooner you start planning for retirement, the better off you will be.

Far too many Australians spend all their money on themselves in their 20s and then spend the next couple of decades putting every cent they earn towards raising their children. There’s nothing wrong with that, but the problem is that they forget to think about providing for themselves in retirement.

Getting your superannuation sorted before you have kids will mean that you’re setup for a comfortable retirement. And thanks to the power of compound interest, your super balance could grow a whole lot more than you think.

Tip 7: Set up accounts for your kids

Once your kids are born, you can consider setting up children’s savings accounts to help them learn the value of money and how to manage it. However, before they come into the world, you should look into setting up some sort of dedicated savings account to provide for their future.

For example, you might set up a savings fund to pay for their tertiary education or maybe just to be held in trust until they turn 18. Whatever your financial goals are for them, setting the account up ahead of time will ensure it doesn’t get put on the back burner when you’re busy managing all the expenses of a growing family. In addition, the balance will have even more years to reap the benefits of compound interest.

A freelance writer with a passion for the written word, Tim loves helping Australians find the right home loans and savings accounts. When he's not chained to a computer, Tim can usually be found exploring the great outdoors.

The budget is here. Which government schemes and programs have been cut and which programs have survived for another year? Read on to find out where you can save money and where your hip pocket's going to be hit.

While you might think that keeping your retirement savings in cash is a risk-free investment strategy, it actually has several important disadvantages and could have a severely detrimental impact on your future financial security.

Ask an Expert

Do not enter personal information (eg. surname, phone number, bank
details) as your question will be made public

finder.com.au is a financial comparison and information service, not a bank or
product provider

We cannot provide you with personal advice or recommendations

Your answer might already be waiting – check previous questions
below to see if yours has already been asked

Your Question

Subscribe to the Finder newsletter for the latest money tips and tricks

Notify me via email when there is a reply

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.

Disclaimer - Hive Empire Pty Ltd (trading as finder.com.au, ABN: 18 118 785 121) provides factual information, general advice and services on financial products as a Corporate Authorised Representative (432664) of Advice Evolution Pty Ltd AFSL 342880. Please refer to our FSG - Financial Products. We also provide general advice on credit products under our own Credit Licence ACL 385509. Please refer to our Credit Guide for more information. We can also provide you with general advice and factual information on about a range of other products, services and providers. We are also a Corporate Authorised Representative of Countrywide Tolstrup Financial Services Group Pty Ltd. ABN 51 586 953 292 AFSL 244436 for the provision of general insurance products. Please refer to our FSG - General Insurance. We hope that the information and general advice we can provide will help you make a more informed decision. We are not owned by any Bank or Insurer and we are not a product issuer or a credit provider. Although we cover a wide range of products, providers and services we don't cover every product, provider or service available in the market so there may be other options available to you. We also don't recommend specific products, services or providers. If you decide to apply for a product or service through our website you will be dealing directly with the provider of that product or service and not with us. We endeavour to ensure that the information on this site is current and accurate but you should confirm any information with the product or service provider and read the information they can provide. If you are unsure you should get independent advice before you apply for any product or commit to any plan. (c) 2018.

Feedback

How likely would you be to recommend finder to a friend or colleague?

0

1

2

3

4

5

6

7

8

9

10

Very UnlikelyExtremely Likely

Required

Required

Required

Optional, only if you want us to follow up with you.

By submitting your email, you agree to the finder.com.au Privacy Policy

Thank you for your feedback.

Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.

Important information about this website

finder.com.au is one of Australia's leading comparison websites. We compare from a wide set of major banks, insurers and product issuers.

finder.com.au has access to track details from the product issuers listed on our sites. Although we provide information on the products offered by a wide range of issuers, we don't cover every available product. You should consider whether the products featured on our site are appropriate for your needs and seek independent advice if you have any questions.

Products marked as 'Promoted' or "Advertisement" are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options and find the best option for you.

The identification of a group of products, as 'Top' or 'Best' is a reflection of user preferences based on current website data. On a regular basis, analytics drive the creation of a list of popular products. Where these products are grouped, they appear in no particular order.

Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment.

We try to take an open and transparent approach and provide a broad based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.

Some product issuers may provide products or offer services through multiple brands, associated companies or different labelling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.

Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.

Please read our website terms of use for more information about our services and our approach to privacy.